What is FBA (Fulfillment by Amazon)?

Fulfillment by Amazon (FBA) is a third-party logistics service where sellers ship their products to Amazon’s network of fulfillment centers, and Amazon takes over the entire fulfillment process. When a customer places an order—whether on Amazon’s marketplace or through other channels using Multi-Channel Fulfillment—Amazon picks, packs, and ships the product from its warehouse. FBA also includes customer service and returns handling for those orders. Products enrolled in FBA automatically qualify for Amazon Prime, giving them the Prime badge and access to free two-day shipping, which significantly boosts visibility and conversion rates on the platform.

Why It Matters

FBA fundamentally changes the economics and operational requirements of selling on Amazon. Sellers who use FBA don’t need their own warehouse infrastructure, fulfillment staff, or carrier relationships for Amazon orders. This makes it possible for small businesses and solo entrepreneurs to compete alongside established brands by leveraging Amazon’s world-class logistics network. The Prime badge alone can increase conversion rates by 25–50% compared to merchant-fulfilled listings, because Prime members preferentially buy from Prime-eligible listings.

However, FBA comes with significant costs and trade-offs. Amazon charges storage fees (monthly and long-term), fulfillment fees per unit, and various surcharges for oversized items, removals, and labeling. During peak seasons, storage fees increase substantially. Sellers who don’t carefully manage their FBA inventory can find margins eroded by storage charges on slow-moving stock. Additionally, FBA sellers have less control over the customer experience—packaging is standardized Amazon packaging, and any fulfillment errors are handled through Amazon’s processes rather than the seller’s own customer service team.

How It Works

FBA operates through a defined workflow between the seller and Amazon’s fulfillment network:

• Inventory Preparation: Sellers prepare products according to Amazon’s packaging and labeling requirements. Each unit must have an FNSKU barcode (Amazon’s internal identifier), and products must meet category-specific prep requirements such as poly-bagging, bubble-wrapping, or overboxing.
• Inbound Shipping: Sellers create shipment plans in Seller Central, specifying which products and quantities they’re sending. Amazon assigns a destination fulfillment center (or multiple centers if inventory is distributed). Sellers ship pallets or cartons to the assigned facilities.
• Storage and Inventory Management: Amazon receives, catalogs, and stores the inventory. Sellers monitor stock levels through Seller Central and plan replenishment shipments to avoid stockouts. Amazon’s Inventory Performance Index (IPI) score tracks how efficiently sellers manage their FBA inventory, with penalties for excess or aged stock.
• Order Fulfillment: When a customer orders an FBA product, Amazon’s warehouse team picks the item, packs it in Amazon-branded packaging, and ships it using Amazon’s carrier network. The entire process typically happens within hours of order placement.
• Returns and Customer Service: Amazon handles customer inquiries, returns, and refunds for FBA orders. Returned items are inspected and either returned to sellable inventory or disposed of based on condition.

How Nventory Helps

Nventory integrates directly with Amazon’s FBA systems to provide unified inventory visibility across your FBA stock and other fulfillment channels. You can monitor FBA inventory levels alongside your warehouse, retail, and other marketplace inventory in a single dashboard. Automated alerts notify you when FBA stock runs low, and demand forecasting helps you plan replenishment shipments before stockouts occur. By synchronizing inventory data across FBA and your other sales channels, Nventory prevents overselling and ensures accurate availability across every platform.